Truss warned EU will ‘retaliate’ against hated Brexit deal
The freedom to strike lucrative trade deals with international partners was touted as one of the main benefits of leaving the European Union. Since Brexit, the UK has successfully reached agreements with 70 countries around the world – although the US is notably not among them. The UK is also currently in the process of finalising yet another deal with the large Indian market, and is expected to join a vast Pacific free trade area by the end of the year.
Liz Truss, in her first overseas trip as Prime Minister flying to New York for the UN General Assembly, told reporters: “There aren’t currently any negotiations taking place with the US and I don’t have an expectation that those are going to start in the short to medium term.”
The prospect of a US-UK trade deal was hailed as one of Brexit’s biggest prizes. Indeed, the US is the UK’s largest trading partner – accounting for 16.6 percent of total UK trade in the year to March 2022.
The Government of Ms Truss’s predecessor, Boris Johnson, had hoped to cement the longstanding special relationship with a post-Brexit trade deal with its NATO ally by 2022.
Former US president Donald Trump – a vocal supporter of Brexit – had been keen to strike an agreement, but talks broke down under his successor, Joe Biden, whose administration raised concerns about Northern Ireland trade arrangements.
As a result, in a historic first, the UK has been negotiating deals with individual US states, having agreed a non-binding memorandum of understanding with Indiana and North Carolina.
Liz Truss has announced she does not expect a UK-US trade deal in the near future
Liz Truss arrives at the first in-person meeting of the UN General Assembly in two years
Statistics released by the Department for International Trade (DIT) show the US is the number one destination for British exports of goods and services, receiving 20.7 percent of the total, as well as the primary source of UK imports, accounting for 12.7 percent.
The value of total UK trade increased by 15.7 percent in the year to the end of July 2022, reaching £1,441billion.
In the year ending July 2022, the UK was the world’s seventh largest exporter of goods and services, totalling £676.6billion, according to DIT statistics released this week. The UK was also the sixth largest importer in the world, purchasing £765.3billion worth of goods and services from abroad.
UK exports to non-EU countries went up by 6.8 percent relative to the previous year, as UK imports from non-EU countries surged by 25.6 percent – indicative of Britain’s opening to the world beyond Europe.
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Free trade deals make international commerce simpler and cheaper by reducing or eliminating tariffs and quotas, and by introducing common standards that do away with the need for costly inspections.
Not only did Brexit entail leaving the EU single market and customs union – throwing up barriers to trade with the Continent – but it also meant the UK was no longer privy to the free trade partnerships the EU had negotiated as a bloc.
The EU had negotiated around 40 trade deals covering more than 70 countries by the time the UK left.
Since Brexit, the UK has signed free trade deals and agreements in principle with 69 countries, as well as one with the EU. However, 63 are rollover deals copying the terms the UK previously traded under as part of the EU.
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The countries with the most trade deals around the world
Among the most lucrative of these rollover agreements are ones with Switzerland (worth £40.3billion in 2021), Canada (£21.4billion), Turkey (£19.4billion), Singapore (£17.2billion) and South Korea (£16.2billion), according to the DIT.
By far the UK’s largest post-Brexit trade deal is EU-UK Trade and Cooperation Agreement, signed with only a day to spare before the deadline on December 30, 2020, and entering into force on May 1, 2021.
Speaking of the deal, the European Commission states: “While it will by no means match the level of economic integration that existed while the UK was an EU Member State, the Trade and Cooperation Agreement goes beyond traditional free trade agreements and provides a solid basis for preserving our longstanding friendship and cooperation.”
The total value of trade between the UK and the EU was £594.6billion in 2021.
The most recent entirely new trade deal signed by the UK was with New Zealand in February. However, the country is the UK’s 55th-ranked trading partner, accounting for just £2.5billion in trade in 2021.
The first trade deal negotiated since Brexit was the UK-Australia Free Trade Agreement, signed in December 2021. The Government estimates that the long-run effect of the agreement will be to increase UK GDP by 0.08 percent, or £2.3 billion a year by 2035.
Once again, the small economic benefit of the agreement is unsurprising as Australia accounts for only a small proportion of UK trade, worth £14.3billion in 2021.
The UK signed a deal with Japan in October 2020, enhancing elements of the existing EU trade deal at the time. An agreement with Norway, Iceland and Liechtenstein was also announced in June 2021.
Talks on establishing a free trade agreement with India began in early 2022 and are targeted to conclude by October. Accounting for £25.7billion worth of trade, India was the UK’s 12th-ranked trading partner in 2021.
Trade with the EU saw a record drop immediately after Brexit, but has since recovered
However, en route to the US this week the Prime Minister made it clear her priority remains the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The free trade area brings together 11 Pacific rim nations including Australia, Canada, Japan and Mexico, and is worth £8,400billion according to the DIT.
She said: “In terms of trade: I mentioned earlier getting CPTPP accession, getting a trade deal with India, getting a trade deal with the GCC. Those are our trade priorities.”
The GCC is the Gulf Cooperation Council of Arab states, a deal with which would cover £33.1billion in trade.
It will fall on new Secretary of State for International Trade Kemi Badenoch to see these negotiations through.